Joint Tenancy - Joint and Several Liability for Guarantors

inspectorperez

One of my children is about to enter into a joint tenancy agreement with 3 other work colleagues. The rent agreement expresses the rent in monthly totals which will be shared equally by all 4 tenants. The agreement is on the basis of joint and several liability which is agreeable to all parties. The agreement does provide for guarantors and I have been asked to sign up as a guarantor for my own son but on a joint and several basis. My immediate reaction is that this is unacceptable as I have no wish to indemnify 3 individuals who I do not know. I am happy to indemnify my own son’s share but nothing more. Is this fair and should I stick to my guns?

Thrugelmir

Your son doesn't have a share. 

pramsay13

If you do not agree to be guarantor will your son still be accepted?

inspectorperez

pramsay13 said:

If you do not agree to be guarantor will your son still be accepted?

I don’t know as yet. It seems reasonable to me to offer a capped indemnity for my own son only, but I do not know what the norm is, if there is one, for these type of joint tenancy agreements.

eddddy

inspectorperez said:
I don’t know as yet. It seems reasonable to me to offer a capped indemnity for my own son only, but I do not know what the norm is, if there is one, for these type of joint tenancy agreements.

TBH, the norm is often that the tenants have joint and several liability, and hence any guarantors do as well. But some people report that they've managed to persuade LL's to cap the guarantee.

But even if you do cap your liability, your son will still have joint and several liability. So if one of his housemates smashes the place up and does £5k or £10k of damage, your son might get sued by the LL for it.

Perhaps a good starting point is to make sure your son understands what the extent of his liability will be, and consequently the extent of your liability - and ask him if he feels he knows his potential housemates well enough to take on that risk.

[Deleted User]

Legally speaking there is no such thing as your son's share of the rent.  He has joint and several liability for paying the whole rent so if you guarantee him then you'll be guaranteeing the whole rent.  If you are uncomfortable with this, and I can understand why you would be, just say no.

anselld

There is a limited form of guarantee which some offer where the rent share is capped for each individual, however liability for damages is still joint and several.  Still, it is better if the Landlord will accept.

inspectorperez

https://www.citizensadvice.org.uk/housing/renting-a-home/using-a-guarantor/
Have found a very helpful page on Citizens Advice Bureau website and I have inserted link in case anyone else comes on to this thread for information.
Many thanks to those who have offered constructive and supportive comments.

saajan_12

inspectorperez said:

One of my children is about to enter into a joint tenancy agreement with 3 other work colleagues. The rent agreement expresses the rent in monthly totals which will be shared equally by all 4 tenants. -okay, but the 'shared equally' is a verbal agreement between the 4, not in the tenancy agreement with the LL, correct? The agreement is on the basis of joint and several liability which is agreeable to all parties. - okay, so son is legally liable for 100%  of the rent if the others don't pay. The agreement does provide for guarantors and I have been asked to sign up as a guarantor for my own son but on a joint and several basis. My immediate reaction is that this is unacceptable as I have no wish to indemnify 3 individuals who I do not know.   I am happy to indemnify my own son’s share but nothing more. -well son is liable for 100% rent+damages, so if you're guaranteeing whatever son owes, that inherently means you guarantee 100% rent+damages.. Is this fair and should I stick to my guns?

In the agreement between Tenants and Landlord, there are no 'shares'. Son's liability is for the entire rent and all damages. So if you're guaranteeing whatever son owes, that inherently means you guarantee the entire rent and all damages, which is incidentally the same as guaranteeing the other 3. 

In theory, I suppose you could agree a capped guarantee for 25% of the annual rent, but 
a) That doesn't help LL for damages, which could be the bit harder to chase as its often a big lump sum. The LL wouldn't be able / willing to get into determining which of the housemates caused the damage to chase their guarantor
b) If son pays his 25% regularly but a housemate is behind, LL could call on your guarantee (say if you're easier to trace than the housemate's guarantor) and ask you for another 25% upto your cap. It might be tricky to phrase the guarantee to reduce each month son pays rent, as then you get into discussions proving which payments came from whom.. 
c) LL is now faced with chasing multiple guarantors rather than finding and suing one person, which is part of the benefit of a joint & several agreement. 
d) Even if you came up with wording that worked, LAs don't tend to like redrafting agreements and the legal cost of getting a lawyer to do it won't be worth it for them

Ultimately I partial guarantees massively weaken the LL's position in terms of the ease and likelyhood of recovering what they are due. I don't see an LL agreeing to your terms, meaning you are left with son not getting the place. 

princeofpounds

And OP, to clarify one thing that I think you are also asking...

Separately to the agreement between LL and the Ts, the Ts have an agreement between themselves to split the liability. At the moment this is verbal, and probably rather implicit rather than explicit too.

In theory, if one of the tenants does a runner, the other tenants can sue them and ask a court to judge that they agreed to share equally. If the balance of evidence is that they did (judging from past actions and communications evidenced) a court would probably, but not necessarily, make the award. 

But in practice it can be difficult to trace the tenant, and difficult to enforce any judgment if they have no money. You would likely not have recourse to the guarantors in the same way that the LL does.

It is theoretically possible for the tenants to formalise their relationship in a contract and add the guarantors too (done properly as a deed etc.), but I haven’t ever heard of anyone actually doing it.

These situations can be tough. From the LL’s point of view, getting joint and several liability is very sensible and they shouldn’t really bear intra-tenant risk. Lots of people do sign up despite the risks, as accommodation can be hard to find. But the risks don’t disappear.

To be frank, it is much less usual for this sort of arrangement (guarantors specifically) to be used with working ‘young professionals’. It’s normally a student thing. 

inspectorperez

sajaan_12 and princeofpounds - thank you both. I think you have clarified things admirably for me.

It has been really refreshing to receive such helpful advice!

I would add that the 4 tenants are all doctors working on the NHS frontline and you might guess that they don't have a lot of time for this sort of thing!